Friday 11 June 2021 2:30 pm

Wall Street edges higher as inflation fears fade while FTSE jumps

Wall Street’s main indexes opened higher today after inflation data calmed concerns over a long-term spike in consumer prices.

The Dow Jones Industrial Average was up 0.2 per cent, while the S&P 500 advanced 0.15 per cent at the open.

Meanwhile, the tech-heavy Nasdaq edged up 0.1 per cent after a week in which tech stocks traded slightly higher.

Attention has now turned to next week’s Federal Reserve meeting for more cues on monetary policy.

Much of the price surge in May came from items such as commodities and airfares and it is expected to be temporary.

With recent data showing weakness in the labour market, the Fed is widely expected to maintain accommodative policy, which is positive for stocks.

“The commentary will be that they’re still focusing on the last two employment reports, which were much weaker than anticipated,” said Sam Stovall, chief investment strategist at CFRA Research.

“This meeting coming up, plus the meeting in late July, will probably result in no policy changes, or even contemplation of policy changes.”

London markets

London’s FTSE 100 rose today after a record annual jump in economic output in April boosted confidence in a strong recovery from the pandemic.

The blue-chip index was up 0.6 per cent this afternoon, buoyed by gains in mining and healthcare stocks.

Precious metal miners advanced two per cent, while base metal miners gained 1.4 per cent.

The UK’s economy in April was a record 27.6 per cent larger than 12 months before, official data showed this morning.

During the month alone, output rose by 2.3 per cent to mark the fastest growth since July 2020.

“There is much to celebrate but there’s also a note of caution, we’ve been here before and we understand how fragile recovery can be and how quickly the pandemic can tilt the field,” said Danni Hewson, finance analyst at AJ Bell.

“The feeling is the recovery is lumpy and delays in lifting restrictions could make it even more bumpy.”

Meanwhile, the mid-cap FTSE 250 advanced by 0.6 per cent after hovering near record highs earlier in the week.

Both indexes have gained more than ten per cent so far this year as businesses reopened and speedy vaccine rollouts boosted the economic mood.

However, they have swayed in a narrow range this month on concerns about a surge in Covid cases.

Market movers

The afternoon’s biggest winner was safety equipment firm Halma, who rose 3.5 per cent, followed by miner Glencore, up by 2.5 per cent.

Manufacturing firm Melrose Industries and packaging company Smurfit Kappa also rose by 2.5 per cent and 2.3 per cent respectively.

Takeaway giant Just Eat was the afternoon’s biggest faller, dropping by 2.7 per cent, followed by Standard Chartered’s 2.6 per cent hit.

Meanwhile, publishing groups Pearson and Informa both dipped by 1.6 per cent and 1.5 per cent respectively.

Around the world

Asian shares rose today as investors shrugged off rising US consumer prices and focused on factors which suggested higher inflation could be short-lived.

Some economists say the rise in US inflation reflected short-term adjustment related to the reopening of the economy, and investors appear confident that the Fed is neatly handling an economic rebound.

MSCI’s broadest index of Asia-Pacific shares outside Japan were up 0.4 per cent, while Japan’s Nikkei swung between small gains and losses before finishing a hair lower.

Meanwhile, Hong Kong’s Hang Seng index gained 0.4 per cent while Chinese blue-chips were down 0.9 per cent.

“Last night’s print is just one in a long string of evidence that inflation is not just rising, but is more than just transitory base effects,” said Rob Carnell, Asia-Pacific chief economist at ING.

“But the Fed, which meets next week, can still point to no deviation of inflation expectations to back up its continued mantra of transitory inflation. The market is buying that for now.”